Was it really the Treasury’s economic modeling that convinced Prime Minister Turnbull to abandon his plan to raise the GST and cut income taxes? Treasury simulations indicated the trade-off would have no significant impact on growth. Or perhaps it was another kind of calculation – electoral – that convinced the Coalition to drop the idea, and the economic numbers just provided political cover.

First published in the Australian Financial Review – here.  The only thing that Paul Keating likes about conservative economic policy is implementing it. Last week, with trade mark cut-through, he was back to his favourite trick of visibly attacking the right while strategically undermining the left. For decades Keating has stood tall in the crowd by taking the

First published by the Australian Financial Review – here.  Economic models are like skin care products: the magic is all in the marketing. Just as honest dermatologists regularly remind consumers that expensive face creams are just “hope in a jar”, honest economists regularly remind politicians and journalists that the “results” of macroeconomic modelling are no more reliable than

No tax concession does less to stimulate innovation or employment than the capital gains tax exemption on luxury homes. Indeed, by encouraging the most wealthy Australians to park billions of dollars in spare bedrooms that gather dust and detritus from Christmases past, the exemption simply diverts capital away from productive uses. A government that is

First published by The Australian Financial Review – here. The mining boom tax cuts have left the Australian budget unable to collect the revenue needed to fund the services that Australians expect from their government. The Treasurer’s insistence that there is no revenue problem, combined with the received political wisdom that the family home is

In the lead-up to the 2013 election both the Coalition and the ALP pledged to make no changes to the superannuation system in the coming term of government. Stability, we were told, was what the system needed. Less than three years later both major parties are promising to change the superannuation system. Reform, we are

After decades in public life some Australian corporate leaders are figuring out what first-year philosophy students grasp in their first lecture: it’s hard to define “ethical”. But as Transfield Services’ chairman Diane Smith-Gander has discovered, the stakes are a bit higher than undergrad debating prizes. Losing the debate over the ethics of running offshore detention centres

First published in the Australian Financial Review – here It’s bizarre that people blame Tony Abbott’s demise on his inability to communicate. He was a great communicator, and people knew exactly what he stood for. No politician was as relentlessly ‘on message’.  Abbott’s problem wasn’t the clarity of his message; it was the incoherence of

The mining industry is furious that if you make a donation to an environment group, your donation is tax deductible. You know the drill. You give someone in a koala suit anything over $2, they give you a receipt and go off to save an owl, hug a tree or, more likely, make a submission

While the public are rightly outraged at the callous tone of the Treasurers ‘get a good job’ remarks in response to housing affordability, economists should be equally disturbed about the bizarre logic behind the government’s approach to the issue. Joe Hockey seems to be increasingly confused about what housing affordability is. Hockey and Abbott believe

A little bit of economic theory is a dangerous thing, and many of the people defending what BHP and Rio Tinto have done to the price of iron ore are demonstrating that they have very little economic knowledge indeed. Economists usually don’t like cartels, or other forms of producer protections, as they help producers and

Joe Hockey’s “do nothing” budget is better than his first “do harm” budget, but he still hasn’t tackled the big issues that face Australia in the wake of the mining boom, writes Australia Institute executive director and economist Richard Denniss. This article was produced for, and originally published by Crikey.com.au – Here. The economy described in

The apparent Coalition aim of cutting taxes does not match its public declarations about reducing the deficit. But tensions within the Coalition make any move on taxes difficult. Does Joe Hockey think removing the deficit levy will make the deficit go away? Announced in last year’s budget, the temporary 2 per cent increase in the

The Earth is flat, climate change is a conspiracy and the only way to collect more money for the states is to collect more money via the GST. How did the nonsensical belief that the GST is the one and only source of commonwealth revenue that can be transferred to the states come to be

The iron ore price is well above its long-term average. Indeed, at $US50 per tonne it is well above the $US36 price that Wayne Swan inherited in 2007. Blaming the iron ore price for Western Australia’s budgetary woes is like blaming the sinking of the Titanic on the iceberg. Yes, it’s a factor and yes,

According to the International Monetary Fund, the Howard/Costello government was the most profligate in Australia for the last 50 years. Indeed, while the mining boom was gathering pace they cut taxes so far and so fast that they forced the Reserve Bank of Australia to rapidly increase interest rates. While countries like Norway took the benefits of resource price

Last year Hockey was talking about cutting welfare payments but now, finally, he’s taking about taking on the vested interests in the superannuation industry to bring concessions under control. This time last year Joe Hockey sat on a silk chair telling Spectator Magazine subscribers about the need to cut welfare payments for the poor. Last

While it is not polite to admit it, the plan to reduce the tax paid by wealthy Australians is one of the main reasons that Treasury predicts we will have so much trouble paying for health and aged care in the future. This is all spelt out in the IGR, albeit in the appendices. Last

Originally Published in the Australian Financial Review on Tuesday 10th March.  Thanks to Peter Costello a retired superannuant drawing down $1 million per year, tax free, doesn’t even have to pay the 2 per cent Medicare levy. That is just one of the inequitable and unaffordable time bombs that the last Liberal treasurer planted for

The biggest fiscal problem Australia faces is that we are not borrowing enough to meet our short term circumstances or long term objectives. Australia’s population will nearly double by 2075. We are currently growing by around 400,000 people – the population of Canberra – every year. If we were are serious about quality of life,

A fundamental contradiction lies at the heart of the Abbott Government. Its assumptions about our national security and its assumptions about economic management are in stark contrast. Something has to give. Our foreign and defence policies are explicitly based on the assumption that the US will retain superpower status in the coming decades. But Joe

Governments serve their citizens best when they engage them through informed debate. Scare tactics are not an acceptable alternative. We need to talk about crises. Whipping up a good crisis has become the foundation on which every case for every reform is now built. Budget black hole! Budget emergency! We will wind up like Greece!

The Newman government was handing an Indian billionaire billions of dollars of taxpayer money for literally – literally – no reason. During the recent state election, both the LNP and Labor in Queensland broadly supported the Carmichael coal project by Indian mining giant Adani. The key difference was whether they were expecting the taxpayer to

Once upon a time if a project couldn’t make a profit without government support conservative politicians would have called it a bad investment. Not these days. Take, for example, the Queensland government’s plan to spend $2 billion on coal transport infrastructure trying to make marginal mines in the Galilee basin financially viable. Even after enormous

The demise of the Australian car industry does not mark the end of taxpayer assistance in Australia, it marks only the end of highly visible assistance. The free marketeers didn’t win, they only defeated the easy targets. The real rorters not only still grow fat on the public purse, they lead the cheer squad for

The Tasmanian Government is taxing electricity users to prop up the losses that keep bleeding from Forestry Tasmania. Indeed, the $30 million “woodchip levy” funded by Tasmanian business and households is significantly larger than the $22 million annual cost of the Renewable Energy Target that some Tasmanian businesses claim to be so disadvantaged by. Energy

It would be easy to highlight the hypocrisy of the government’s determination to rely on a price signal to reduce GP visits, versus its determination to avoid price signals for reducing greenhouse gas emissions. But what may look like policy inconsistency is actually a central element of the government’s strategy. Scrapping the carbon price helps

Is it OK to break laws that you don’t believe in? Corporate Australia certainly seems to think so. Coles lost a Federal Court battle in June over the definition of “fresh”, when it was discovered their “baked today, sold today” bread range included products made overseas, frozen and transported months earlier. Coles took a slap

The Queensland government’s decision to pour billions of taxpayer dollars into the Adani coal project in the Galilee basin proves, once and for all, that the mining industry are leaners, not lifters.

If the Greens and Labor really are concerned about cost of living, they should support the re-indexation of fuel excise in return for a say on how this revenue is spent, writes Richard Denniss for The Drum.